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EXHIBIT 99.1
LOCKUP AGREEMENT
This Lockup Agreement ("Agreement"), dated as of May 30, 2001, is entered
into by and among Talon Automotive Group, Inc., a Michigan corporation
("Talon"), VS Holdings, Inc., a Michigan corporation ("Holdings"), Xxxxxx
Metal Products Company, a Nova Scotia unlimited liability company ("Products")
(Talon, together with Holdings and Products, the "Company"), and the
undersigned holders ("Consenting Holders") of the Company's 9.625% Senior
Subordinated Notes Due 2008 (the "Notes").
WHEREAS, pursuant to an Indenture dated April 28, 1998 (the "Indenture"),
the Company has previously issued the Notes;
WHEREAS, certain of the Consenting Holders have formed an ad hoc committee
for the purpose of negotiating with the Company (the "Noteholders Committee"),
and have engaged Milbank, Tweed, Xxxxxx & XxXxxx LLP ("Milbank") as legal
counsel and Xxxxxx Capital Partners ("Xxxxxx") as financial advisors;
WHEREAS, the Company and the Consenting Holders have engaged in good faith
negotiations with the objective of reaching an agreement with regard to a
financial reorganization of the Company;
WHEREAS, the Company and the Consenting Holders now desire to implement a
financial restructuring of the Company on the terms set forth in this Agreement
and in the Term Sheet ("Term Sheet") attached hereto as Schedule 1 (the
"Financial Restructuring");
WHEREAS, in order to implement the Financial Restructuring, the Company
has determined (i) to cause Talon and Holdings to commence cases (collectively,
the "Chapter 11 Case") under chapter 11 of the United States Bankruptcy Code
(the "Bankruptcy Code") for the Company in the United States Bankruptcy Court
for the Eastern District of Michigan (the "Bankruptcy Court"), (ii) to cause
Products to commence a case in Canada (the "CCAA Case") under the Companies'
Creditors Arrangement Act (the "CCAA") in the Ontario Superior Court of Justice
(the "Canadian Court"), (iii) to prepare and file in the Chapter 11 Case and
the CCAA Case a plan of reorganization (the "Plan") and accompanying disclosure
statement (the "Disclosure Statement") for the purpose of implementing the
Financial Restructuring in accordance with this Agreement and the Term Sheet,
and (iv) to have the Disclosure Statement approved and Plan confirmed by the
Bankruptcy Court and the Canadian Court in accordance with the timetable
provided herein; and
WHEREAS, each of the Consenting Holders is prepared to commit to vote is
claims (as defined in the Bankruptcy Code) in the principal amount of Notes
held by such Consenting Holder (for each such Consenting Holder, in the
principal amount set forth below its name on its signature page to this
Agreement, the "Subject Claims") to accept the Plan, subject to the terms and
conditions of this Agreement and the Term Sheet;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and
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sufficiency of which are hereby acknowledged, the Company and the Consenting
Holders agree as follows:
1. Forbearance. During the period commencing on the date hereof and ending
on the earlier of June 29, 2001, and the date that the Chapter 11 Case and the
CCAA Case are filed (the "Commencement Date"), and so long as no "Agreement
Termination Event" (as defined in Paragraph 8 of this Agreement) has occurred,
each Consenting Holder agrees: (A) to forbear from the exercise of any rights or
remedies it may have under the Consenting Holder's Notes, the Indenture or other
applicable law with respect to any default in existence or arising under the
Consenting Holder's Notes and the Indenture; and (B) that in the event of any
action by an Indenture Trustee to enforce rights and remedies triggered by a
Default or an Event of Default under the Indenture, to direct the Trustee to
forbear from exercising such rights and remedies, but only if and to the extent
(i) such action by the Consenting Holder is authorized and permissible under the
Indenture and the Notes, and (ii) no indemnity is required by the Indenture
Trustee arising from or in connection with such directions.
2. Restriction on Transfer. Each Consenting Holder agrees that, so long as
this Agreement has not been terminated in accordance with Paragraph 8 hereof, it
shall not sell, transfer or assign any of the Notes or Subject Claims arising
under the Notes or any option thereon or any right or interest (voting or
otherwise and including any participation interest) therein, unless the
transferee thereof agrees in writing to be bound by all the terms of this
Agreement by executing a counterpart signature page of this Agreement, and the
transferor provides the Company with a copy thereof, in which event the Company
shall be deemed to have to constitute obligations in favor of such transferee,
and the Company shall confirm that acknowledgment in writing upon the request of
such transferee.
3. Preparation of Restructuring Documents. The Company shall instruct its
counsel promptly to deliver to the Consenting Holders for their review and
approval of the Plan, the Disclosure Statement, the DIP Facility (as defined in
the Term Sheet), the Bankruptcy Court and Canadian Court orders to be prepared
in connection therewith, and all other documents or agreements to be executed or
implemented in connection therewith, or otherwise contemplated by, the Financial
Restructuring, each of which documents and agreements shall be consistent in all
material respects with this Agreement and the Term Sheet (collectively, the
"Restructuring Documents"). The Company shall coordinate with the Consenting
Holders in preparing the Restructuring Documents and shall afford Milbank,
counsel to the Noteholders Committee, a reasonable opportunity to review and
comment upon the Restructuring Documents prior to their filing. The Company and
the Consenting Holders agree that (a) the negotiation of this Agreement and the
attached Term Sheet, and (b) the delivery of any information by the Company to
the Consenting Holders in connection with this Agreement and the attached Term
Sheet, are not intended by the Company to be a solicitation of the Consenting
Holders' approval of any plan of reorganization within the meaning of Section
1125 of the Bankruptcy Code. The Company and the Consenting Holders further
agree that this Agreement is not a financial accommodation contract that would
be unenforceable under Section 365(c)(2) of the Bankruptcy Code, and each agrees
not to take any contrary position in the Chapter 11 Case or the CCAA Case.
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4. Company Covenants Regarding Timetable. The Company agrees that it
shall: (i) deliver a draft of the Plan, the Disclosure Statement and the DIP
Facility documents to Milbank prior to commencement of the Chapter 11 Case and
the CCAA Case; (ii) commence the Chapter 11 Case and CCAA Case on or prior to
June 29, 2001; (iii) deliver a draft of all Restructuring Documents other than
those contemplated in subparagraph (i) above to each Consenting Holder at least
5 business days prior to the Bankruptcy Court hearing on approval of the
Disclosure Statement; (iv) obtain an order of the Bankruptcy Court approving the
Disclosure Statement on or prior to September 17, 2001; and (v) obtain an order
of the Bankruptcy Court confirming the Plan on or prior to October 31, 2001. The
Company further agrees that the effective date of the Plan shall be on or prior
to December 17, 2001.
5. Certain Other Company Covenants. The Company agrees that it shall take
all reasonable steps necessary and desirable to obtain any and all required
regulatory and/or third party approvals for the Financial Restructuring.
6. Voting. Subject to the condition that, and so long as, no Agreement
Termination Event has occurred, including without limitation (i) the Disclosure
Statement has been approved by the Bankruptcy Court (and the Canadian Court if
required under applicable law) by September 17, 2001, (ii) the Disclosure
Statement as so approved contains information in respect of the Company's
business and operations that is not materially inconsistent with the information
heretofore provided by the provided by the Company to the Consenting Holders,
Milbank or Xxxxxx, and (iii) the terms of the Plan and all Restructuring
Documents are consistent in all material respects with the terms set forth in
and contemplated by this Agreement and the Term Sheet, then each Consenting
Holder agrees that it shall timely vote (or shall cause or instruct any
custodial agent to so vote) the Subject Claims to accept the Plan and shall not
revoke or withdrawal such vote.
7. Support of the Financial Restructuring; Additional Covenants. As long
as this Agreement has not been terminated in accordance with Paragraph 8 hereof,
the Company will take all necessary and appropriate actions to achieve
confirmation of the Plan, including, upon approval of the Disclosure Statement
by the Bankruptcy Court (and the Canadian Court if required under applicable
law), recommending to the holders of claims and interests impaired under the
Plan that they vote to approve the Plan. As long as this Agreement has not been
terminated in accordance with Paragraph 8 hereof, neither the Company nor any
Consenting Holder will (i) object to confirmation of the Plan or otherwise
commence any proceeding to oppose or alter the Plan or any of the Restructuring
Documents in any way inconsistent with this Agreement and the Term Sheet
appended hereto and incorporated herein, (ii) vote for, consent to, support or
participate in the formulation of any plan of reorganization or liquidation
other than the Plan proposed or filed or to be proposed or filed in any chapter
11 case or chapter 7 case, or any CCAA case, commenced in respect of the Company
or any of its subsidiaries, (iii) directly or indirectly seek, solicit, support
or encourage any plan other than the Plan, or any sale, proposal or offer of
dissolution, winding up, liquidation, reorganization, merger or restructuring of
the Company or any of its subsidiaries that reasonably could be expected to
prevent, delay or impede the successful implementation of the Financial
Restructuring as contemplated by the Plan and the Restructuring Documents, (iv)
object to the Disclosure Statement or the solicitation of consents to the Plan,
or (v) take any other action that is inconsistent with, or that would delay
confirmation of, the Plan. Notwithstanding the foregoing or anything else in
this Agreement to the contrary, no Consenting Holder shall be barred from
objecting to (x) approval of the
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Disclosure Statement if such Disclosure Statement contains a material
misstatement or omission or fails to contain adequate information for the
purposes of Bankruptcy Code Section 1125 or other applicable law, or (y)
confirmation of the Plan, or approval, execution or implementation of any
Restructuring Document, if such Plan or Restructuring Document contains terms
that are materially inconsistent with this Agreement or the Term Sheet. In
addition, except as expressly provided herein, nothing herein is intended to,
or does, in any manner, waive, limit, impair, or restrict the ability of the
Company or any Consenting Holder to protect and preserve all of its rights,
remedies, and interests, including, without limitation, with respect to its
Subject Claims or any other claims, or with respect to such parties' full
participation and role in the Chapter 11 Case or the CCAA Case.
8. Termination of Agreement. This Agreement shall terminate
automatically upon the occurrence of any "Agreement Termination Event" (as
hereinafter defined), unless the occurrence of such Agreement Termination Event
is waived in writing by Consenting Holders holding not less than sixty seven
percent (67%) of the aggregate principal amount of Notes that constitute
Subject Claims (excluding the claims of "insider holders" as defined on the
signature pages hereto). If any Agreement Termination Event occurs (and has not
been so waived) at the time when permission of the Bankruptcy Court and the
Canadian Court shall be required for the Consenting Holders to change or
withdraw (or cause to be changed or withdrawn) their votes to accept the Plan,
the Company shall not oppose any attempt by any of the Consenting Holders to
change or withdraw (or cause to be changed or withdrawn) such votes at such
time. Upon the occurrence of an Agreement Termination Event, each Consenting
Holder and the Company shall have all rights that are available to it under the
Notes, the Indenture, applicable law or otherwise, including, without
limitation, the right to take action on account of any then existing default
under the Notes or Indenture.
An "Agreement Termination Event" shall mean any of the following:
(a) The Chapter 11 Case and CCAA Case to implement the Financial
Restructuring are not commenced by June 29, 2001;
(b) The Bankruptcy Court fails to enter an order in the Chapter 11
Case approving the Disclosure Statement with respect to the Plan by
September 17, 2001;
(c) The Plan or any of the Restructuring Documents as filed by the
Company or approved in the Chapter 11 Case or the CCAA Case contains any
term that is materially inconsistent in any respect with the Financial
Restructuring contemplated by and provided for in this Agreement and the
Term Sheet, or has been modified, amended or replaced in any respect that
makes it materially inconsistent in any respect with this Agreement and the
Term Sheet;
(d) The Bankruptcy Court in the Chapter 11 Case (and the Canadian
Court in the CCAA Case, if required under applicable law) fails to enter an
order confirming the Plan by October 31, 2001;
(e) The Plan is not effective by its terms and substantially
consummated by December 17, 2001;
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(f) The Company breaches any other provision of this
Agreement, including, without limitation, ceasing to use its reasonable
best efforts to obtain approval of the Disclosure Statement and/or
confirmation of the Plan;
(g) The Chapter 11 Case of the Company is converted to a case
under chapter 7 of the Bankruptcy Code;
(h) A chapter 11 trustee is appointed in the Chapter 11 Case;
(i) The Company defaults under the DIP Facility and, except as
provided in subparagraph 8(l) below, such default has not been waived
or cured in accordance with the terms of the DIP Facility;
(j) The Company fails to comply with any covenants contained
in this Agreement or the Term Sheet;
(k) Any representation or warranty made by the Company or its
agents or representatives to the Noteholders Committee, the Consenting
Holder, or in connection with this Agreement or the Term Sheet
(including without limitation representations relating to the Company's
financial performance) is false or misleading in any material respect
when made;
(l) The Company fails to meet the financial covenants
contained in the DIP Facility or fails to meet or comply with any other
provision of the DIP Facility that is material to the Company's
financial performance, business operations or ability to confirm and
consummate the Plan in a timeframe consistent with the provisions of
Paragraph 4 above;
(m) A material adverse change occurs in the assets,
liabilities, business operations or financial condition of the Company
after the date of this Agreement, including, but not limited to, a
change in circumstances rendering the liquidity provided in the Exit
Facility as contemplated in Section I of the Term Sheet (attached
hereto as Schedule 1) inadequate in the judgment of the Noteholders
Committee, but not including, however, any material adverse change that
occurs solely by reason of the filing of the Chapter 11 Case;
(n) The Company, on or before the date that the Plan is
confirmed by the Bankruptcy Court and the Canadian Court, fails to
obtain an order or orders authorizing the assumption by the Company of
the prepetition contracts with each of Ford Motor Company, General
Motors Corporation, or DaimlerChrysler AG, or any of their affiliated
companies, and
(o) The due diligence review being conducted by the financial
advisors and legal counsel to the Noteholders Committee reveals any
materially adverse matter not previously disclosed or otherwise known
to the Consenting Holders, Milbank or Xxxxxx.
9. Specific Performance. It is understood and agreed by each of
the parties hereto that money damages would not be a sufficient remedy for any
breach of this Agreement by any
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party and each non-breaching party shall be entitled, in addition to any other
remedies, to the remedy of specific performance and injunctive or other
equitable relief as a remedy for any such breach, without the necessity of
securing or posting a bond or other security in connection with such equitable
relief.
10. Good Faith Negotiation of Restructuring Documents. The Company and
each Consenting Holder covenants and agrees to negotiate in good faith the
Restructuring Documents, which the Company covenants will be, in all material
respects, consistent with this Agreement and the Term Sheet.
11. Representations and Warranties. The Company, on the one hand, and each
of the Consenting Holders, on the other, represents and warrants to the other
that the following statements are true, correct and complete as of the date
hereof:
(a) Corporate Power and Authority. It has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this Agreement,
including, as to each Consenting Holder, that as of the date hereof, it is the
beneficial owner of, and/or the investment adviser or manager for the beneficial
owners of (with the power to vote and dispose of), the Subject Claims;
(b) Authorization. The execution and delivery of this Agreement and
the performance of its obligations hereunder have been duly authorized by all
necessary action on its part, and the Company further represents that the
Financial Restructuring, this Agreement and the attached Term Sheet have been
approved in writing by the Boards of Directors and similar governing bodies of
the Company and the Subsidiaries;
(c) No Conflicts. The execution, delivery and performance by it of
this Agreement do not and shall not (i) violate any provision of law, rule or
regulation applicable to it or any of its subsidiaries or its certificate of
incorporation or by-laws or those of any of its subsidiaries or (ii) conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation to which it or any of
its subsidiaries is a party or under its certificate of incorporation or
by-laws; except however that the filing of the Chapter 11 Case and CCAA Case,
and the implementation of the Financial Restructuring, may constitute events of
default under certain of the Company's contracts.
(d) Governmental Consents. The execution, delivery and performance by
it of this Agreement do not and shall not require any registration or filing
with, consent or approval of, or notice to, or other action to, with or by, any
Federal, state or other governmental authority or regulatory body, except such
filings as may be necessary and/or required for disclosure by the Securities
and Exchange Commission or similar Canadian regulatory body, in connection with
the commencement of the Chapter 11 Case and the CCAA Case, and the approval of
the Disclosure Statement and confirmation of the Plan; and
(e) Binding Obligation. This Agreement is the legally valid and
binding obligation of it, enforceable against it in accordance with its terms,
except as enforcement may
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be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
12. No Transfers to Company Insiders. Except as disclosed on attached
Schedule 2, the Company represents and warrants that it has made no transfer of
property of the Company, including without limitation the making of loans, to
any officer, director, shareholder, employee or any insider of the Company
within the year ending upon the date hereof, other than compensation paid in
the ordinary course of the Company's business operations, and the Company
further covenants and agrees that it shall not make any such transfer at any
time in the future until a new post-effective date board of directors is in
place pursuant to the terms of the Term Sheet and such new board of directors
has formally approved the transfer.
13. Employment, Consulting and Other Contracts. The Company will not
assume (as that term is used in Section 365 of the Bankruptcy Code) any
employment, consulting or similar contracts without the prior agreement of the
Noteholders Committee, except for those employment agreements listed on
Schedule 3 hereto.
14. Further Acquisition of Securities. This Agreement shall in no way be
construed to preclude any of the Consenting Holders from acquiring additional
Notes. However, any and all rights and claims obtained by a Consenting Holder
with respect to, on account of or pursuant to any subsequently acquired Notes
shall automatically be deemed to be Subject Claims and to be subject to the
terms of, and the obligations of such Consenting Holder under, this Agreement
and the Term Sheet.
15. Effectiveness; Amendments. This Agreement shall not become effective
and binding on the parties hereto unless and until counterpart signature pages
to this Agreement have been executed and delivered by the Company, and by
Consenting Holders that hold in the aggregate at least sixty seven (67%) of the
aggregate of issued and outstanding Notes that constitute Subject Claims
(excluding the claims of "insider holders" as defined on the signature pages
hereto). Once effective, this Agreement may not be modified, amended or
supplemented except in writing signed by the Company, and by Consenting Holders
holding not less than sixty seven percent (67%) of the aggregate of Notes that
constitute Subject Claims (excluding the claims of "insider holders" as defined
on the signature pages hereto).
16. Disclosure of Individual Holdings. Unless required by applicable law
or regulation (including without limitation the Schedule of Twenty Largest
Creditors, Statements of Affairs, and other schedules required under the
Bankruptcy Code, Federal Rules of Bankruptcy Procedure, Local Rules of the
Bankruptcy Court, U.S. Trustee Guidelines, and their respective Canadian
counterparts, to be filed by the Company in the Chapter 11 Case or CCAA Case),
the Company shall not disclose the holdings of Subject Claims of any of the
Consenting Holders without the prior written consent of such Consenting Holder;
and if announcement or disclosure is so required by law or regulation, the
Company shall afford the Consenting Holders a reasonable opportunity to review
and comment upon any such announcement or disclosure prior to the Company
making such announcement or disclosure. The foregoing shall not prohibit the
Company from disclosing the approximate aggregate holdings of Notes of all
Consenting Holders. Once executed and effective, a copy of this Agreement may
be delivered to (i) the Company's bank group lenders, (ii) the Company's
principal trade vendors and customers, and
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(iii) with consent of the Consenting Holders (which consent shall not
unreasonably be withheld) to other parties in interest.
17. Accredited Investors. Each Consenting Holder represents that (i) it
is a sophisticated investor with respect to the transactions described herein
with sufficient knowledge and experience in owning and investing in securities
similar to the Notes held by such Consenting Holder to evaluate properly the
transactions contemplated by this Agreement and it has made its own analysis
and decision to enter in this Agreement; and (ii) it is an "accredited
investor" within the meaning of Section 2(a)(15) of the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.
18. Impact of Appointment to Creditors Committee. Notwithstanding
anything herein to the contrary, in the event that any Consenting Holder is
appointed to and serves on a committee of creditors in the Company's Chapter 11
Case, the terms of this Agreement shall not be construed so as to limit such
Consenting Holder's exercise, in its sole discretion, of its fiduciary duties,
if any, to any person or entity arising from its service on such committee, and
any such exercise of such fiduciary duties shall not be deemed to constitute a
breach of the terms of this Agreement; provided, however, that the fact of such
service on such committee (i) shall not otherwise affect the continuing
validity or enforceability of this Agreement and (ii) shall not modify or limit
the obligations of such individual Consenting Holder to vote its Subject Claims
to accept the Plan, provided that no Agreement Termination Event has occurred
and this Agreement remains in effect.
19. Official Unsecured Creditors Committee. In conjunction with the
Chapter 11 Case and pursuant to either Sections 1102(a)(1) or (a)(2) of the
Bankruptcy Code, the Company shall support the appointment of an official
committee comprised of Consenting Holders and such other holders of unsecured
claims as may be appointed by the Office of United States Trustee (the "Official
Committee"). The Official Committee shall, subject to compliance with the
applicable provisions of the Bankruptcy Code, be entitled to retain Milbank and
Xxxxxx to represent the Official Committee and assist in the prosecution of the
Plan and related matters. In the event that the Official Committee in the
Chapter 11 Case does not retain Milbank or Xxxxxx, the Company shall actively
support the approval, under Section 503(b) of the Bankruptcy Code, of the
payment of the reasonable costs and fees incurred by Milbank and Xxxxxx on
behalf of the Noteholders Committee.
20. Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York,
without regard to any conflicts of law provision that would require the
application of the law of any other jurisdiction. By its execution and delivery
of this Agreement, each of the parties hereto hereby irrevocably and
unconditionally agrees for itself that any legal action, suit or proceeding
against it with respect to any matter under or arising out of or in connection
with this Agreement or for recognition or enforcement of any judgment rendered
in any such action, suit or proceeding, may be brought in the U.S. District
Court for the Southern District of New York. By execution and delivery of this
Agreement, each of the parties hereto hereby irrevocably accepts and submits
itself to the nonexclusive jurisdiction of such court, generally and
unconditionally, with respect to any such action, suit or proceeding.
Notwithstanding the foregoing consent to jurisdiction, upon the commencement of
the Company's Chapter 11 Case, each of the parties hereto hereby
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agrees that the Bankruptcy Court shall have exclusive jurisdiction of all
matters arising out of or in connection with this Agreement.
21. Fees and Expenses. The Company shall perform and shall not terminate
its fee agreements with Milbank and Xxxxxx except as otherwise provided in the
applicable engagement agreements. Five (5) business days prior to the
Commencement Date, the Company shall pay in full any outstanding bills, plus
an estimate of unbilled fees and costs up to the filing of the voluntary
chapter 11 petition, of Milbank and Xxxxxx. If any party brings an action
against any other party based upon a breach by such other party of its
obligations under this paragraph, the prevailing party shall be entitled to
all reasonable expenses incurred, including reasonable attorneys', accountants'
and financial advisors' fees in connection with such action.
22. Notices. All notices and consents hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered by courier
service, messenger, or telecopy, or initially deposited in the mails, by
certified or registered mail, postage prepaid return receipt requested, to the
following addresses, or such other addresses as may be furnished hereafter by
notice in writing, to the following parties:
(b) if to the Company, to:
Talon Automotive Group, Inc.
000 Xxxxxxxx Xx.
Xxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
With copies to:
Xxxxxx Xxxxxxx, P.L.C.
000 Xxxx Xxxxx Xxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
and
Xxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxx, 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
(c) if to any Consenting Holder, to such Consenting Holder at the
address shown for such holder on the applicable signature page
hereto, to the attention of the person who has signed this
Agreement on behalf of such holder,
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With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 X. Xxxxxxxx Xx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx Xxx Xxxxx, Esq.
Attention: Xxxx Xxxxxxx, Esq.
23. Survival. Notwithstanding the sale of its Subject Claims in accordance
with Paragraph 2 hereof or the termination of the Consenting Holders'
obligations hereunder in accordance with Paragraph 8 hereof, the Company's
obligations and agreements set forth in Paragraphs 16, 20 and 21 hereof shall
survive such termination and shall continue in full force and effect for the
benefit of the Consenting Holders in accordance with the terms hereof.
24. Reservation of Rights. This Agreement and the Term Sheet are part of a
proposed settlement of a dispute among the parties hereto. Except as expressly
provided in this Agreement and the Term Sheet: (A) nothing herein is intended
to, or does, in any manner waive, limit, impair or restrict the ability of the
Company, each Consenting Holder and any trustee under the Notes and Indenture to
protect and preserve its rights, remedies and interests, including without
limitation, its claims against the other; (B) nothing herein shall be deemed an
admission of any kind; and (C) nothing contained herein effects a modification
of the rights of the Company and the Consenting Holders or any trustee under the
Notes and Indenture, unless and until the Plan is confirmed and the Financial
Restructuring becomes effective. If the transactions contemplated herein are not
consummated, or if this Agreement is terminated for any reason, the parties
hereto fully reserve any and all of their rights. Pursuant to Federal Rule of
Evidence 408 and any applicable state rules of evidence, or comparable Canadian
rules of evidence, this Agreement and all negotiations relating thereto shall
not be admissible into evidence in any proceeding other than a proceeding to
enforce its terms.
25. Representation by Counsel. Each party hereto acknowledges that it has
been represented by counsel in connection with this Agreement and the
transactions contemplated by this Agreement. Accordingly, any rule of law or any
legal decision that would provide any party hereto with a defense to the
enforcement of the terms of this Agreement against such party based upon lack of
legal counsel, shall have no application and is expressly waived.
26. Consideration. It is hereby acknowledged by the parties hereto that,
other than the Company's agreements, covenants, representations and warranties,
as more particularly set forth herein and in the Term Sheet, no consideration
shall be due or paid to the Consenting Holders for their agreement to vote the
Subject Claims to accept the Plan in accordance with the terms and conditions of
this Agreement.
27. Acknowledgment. This Agreement is not and shall not be deemed to be a
solicitation for the tender or exchange of the Notes, a solicitation for waivers
to the Notes or the Indenture, or a solicitation for consents to the Plan. The
acceptance of the Consenting Holders
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will not be solicited until such Parties have received the Disclosure Statement
and related ballots, as approved by the Bankruptcy Court.
28. Headings. The headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
29. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of the parties and their respective successors, assigns, heirs,
executors, administrators and representatives.
30. Several, Not Joint, Obligations. The agreements, representations and
obligations of the Consenting Holders under this Agreement and the Term Sheet
are, in all respects, several and not joint.
31. Prior Negotiations. This Agreement supersedes all prior negotiations
with respect to the subject matter hereof.
32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement.
33. No Third-Party Beneficiaries. Unless expressly stated herein, this
Agreement shall be solely for the benefit of the parties hereto, and no other
person or entity shall be a third party beneficiary hereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first above written.
[Signatures Omitted]
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SCHEDULE 1
TERM SHEET TO LOCKUP AGREEMENT REGARDING
CHAPTER 11 RESTRUCTURING OF TALON
AUTOMOTIVE GROUP, INC. AND ITS SUBSIDIARIES
The terms discussed herein are part of a proposed comprehensive
compromise, each element of which is consideration for the other elements and
is an integral component of the proposed reorganization. Capitalized terms used
herein, if not defined, are used as defined in the Lockup Agreement. This Term
Sheet is not enforceable unless and until it becomes a schedule to the executed
Lockup Agreement.
I. CREDIT AGREEMENT
o DIP Facility and Exit Facility: The Company shall enter into a
Debtor-in-Possession ("DIP Facility") and a post-Chapter 11 Case working
capital exit facility ("Exit Facility") on terms substantially the same
as those contained in the Amended and Restated Talon Automotive Group,
Inc. Credit Agreement With Comerica Bank as Agent, dated February 16,
2001, among the bank lenders and the Company (the "SCF"), including
specifically, but without limitation, the same provisions relating to
availability and advances, and with the following additional terms:
o The amount of DIP Facility borrowing base availability shall be
acceptable to the Committee;
o The amount of Exit Facility borrowing base availability shall be
acceptable to the Committee; and
o Definitive documentation, including other covenants, terms and
conditions, acceptable to the Committee.
II. 9.625% NOTES
o Talon shall contribute all its assets, subject to its liabilities (except
the liabilities arising under the 9.625% Notes) to Holdings; the
Noteholders shall receive in exchange for their Notes ninety seven
percent (97%) of the new common stock of reorganized Holdings (minus any
shares distributed under the Plan on account of other unsecured claims);
the Notes, and the guaranties of the Notes, and all rights and
obligations thereunder, shall be extinguished; Talon shall receive 3% of
the new common stock of Holdings; and Holdings shall own 100% of the
equity in reorganized Products.
III. OTHER UNSECURED CREDITORS
o The claims of ordinary course critical trade vendors will be unimpaired
under the Plan. The treatment of all other general unsecured creditors
(e.g., claims
FN
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13
SCHEDULE 1
TERM SHEET TO LOCKUP AGREEMENT REGARDING
CHAPTER 11 RESTRUCTURING OF TALON
AUTOMOTIVE GROUP, INC. AND ITS SUBSIDIARIES
arising from rejected contracts, claims based upon notes and other
unsecured financial accommodations) shall be subject to the mutual
agreement of the Company and the Committee, to be agreed upon prior
to commencement of the Chapter 11 Case. Canadian counsel shall
confirm, prior to the commencement of the Canadian Case, that
Holdings will be able to retain one hundred percent (100%) of the
equity in Products upon the consummation of such Canadian
bankruptcy proceeding for Products.
IV. COMMON AND PREFERRED STOCK
o The holders of the old common and preferred stock of Talon ("Old
Equity") will receive three series of warrants representing a total
of 20.0% of the fully diluted equity of Holdings with exercise
prices pursuant to the schedule below.
o Warrants: The Old Equity will receive 3 series of warrants. The
Series A and Series B warrants will each represent 2.5% of the
stock of Holdings. The Series C warrants will represent 15.0% of
the stock of Holdings. The exercise price of each series of
warrants has been set in the chart below at a level representing a
recovery of the face value of the 9.625% Notes for the Noteholders,
assuming 10,000,000 shares initially issued (300,000 to the Old
Equity; and 9,700,000 to the Noteholders and any other unsecured
creditors receiving shares on their claims), and taking into
account dilution created by any preceding series of Series A and B
warrants:
o Warrants Percentage Recovery on Notes Strike Price Number of Shares
-------- ---------------------------- ------------ ----------------
o Series A 70% $ 8.66 256,410
o Series B 80% $ 9.89 262,985
o Series C 93% $ 11.51 1,856,364
o The warrants: (i) shall have a five year term; (ii) shall contain
customary anti-dilution provisions (but not covering dilution
resulting from the issuance of equity securities to management);
(iii) shall contain additional customary protections found in
warrants to the effect that in the event of any combination or
subdivision of the outstanding shares (including but not limited to
in reverse stock splits), the warrant shares and cash exercise
price shall be adjusted proportionately; and (iv) shall not be
subject to any future valuation or pricing premised upon the
Black-Scholes formula or any other valuation methodology.
FN
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14
SCHEDULE 1
TERM SHEET TO LOCKUP AGREEMENT REGARDING
CHAPTER 11 RESTRUCTURING OF TALON
AUTOMOTIVE GROUP, INC. AND ITS SUBSIDIARIES
o On the Effective Date of the Plan, all shares of old common and old
preferred stock of Holdings, and all options, warrants and other
rights in respect of such common and preferred stock, shall be
cancelled, extinguished and discharged.
V. BOARD COMPOSITION
o The Board of Directors of Holdings shall be comprised of five members
(the "New Board"). Three members shall be appointed by the holders of
the 9.625% Notes, and one member shall be appointed by Old Equity
(three year term), which members shall be identified five days prior
to the hearing on confirmation of the Plan. The fifth member shall be
the CEO of the Company. The same persons shall comprise the Board of
Directors of reorganized Products.
VI. RELATED PROVISIONS
o The Plan shall provide that all causes of action of the Company on
the date of this Term Sheet, and all causes of action created by the
filing of the Chapter 11 Case, shall be preserved for the benefit of
reorganized Holdings and Products; provided, however, that the Plan
may contain release and exculpatory provisions for the benefit of
current and former officers and directors of the Company limited to
acts and omissions in their capacity as officers and directors.
However, any release and exculpation provisions of the Plan shall not
be applicable to (i) avoidance actions listed in Bankruptcy Code
Section 550(a), (ii) borrowed money, (ii) employment contracts, (iii)
consulting contracts, (iv) the receipt of transfers from the Company,
direct or indirect, in connection with acquisitions by the Company of
subsidiaries, business enterprises or other material assets, and (v)
any acts or omissions that constitute gross negligence, fraud, or
willful misconduct.
o The Company represents that all material property of the Company
is subject to a non-avoidable perfected security interest in favor of
the lenders under the SCF.
o Holdings and Products will not assume or seek to assume (as that term
is used in Section 365 of the Bankruptcy Code) any employment,
consulting or similar contract, except pursuant to prior agreement
with the Committee.
o The Plan will provide that the Company's claims against Xxxx Xxxxx,
et al., will be placed in a litigation trust, which will be shared on
a pro-rata basis by the holders of new common shares.
FN
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15
SCHEDULE 2
The Company has paid management fees to Talon LLC in the amount of $41,667 per
month through December, 2000.
The Company participates in several group employee benefit and insurance plans
with affiliated companies, and the Company has made and continues to make
certain payments to such affiliates for the Company's share of the legal fees,
benefits, premiums and claims related to such plans.
The Company uses the law firm of Timmis & Xxxxx LLP as its general counsel. One
of the current shareholders of the Company is a partner in the law firm, and the
Company has made and continues to make certain payments of legal fees to the law
firm for legal services rendered.
The Company leases certain of its manufacturing facilities in Canada from Xxxxx
Xxxxxx, and the Company has made and continues to make certain payments of
rents and amounts pursuant to the leases of such facilities.
The Company leased a facility in Chesterfield, Michigan from an affiliate on a
temporary basis through October, 2000, and has made certain payments of rents
and other amounts for the lease of such facility.
FN
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SCHEDULE 3
1. Amended and Restated Employment Agreement for Xxxxxxx X. Xxxxxx dated
May __, 2001.
2. Employment Agreement for Xxxxx X. Xxxxxxxx dated March 1, 2001.
FN
